Over the past few years, under pressure from the public and from regulators, concerns over data privacy have led companies to rethink their data collection strategies. This effectively has ended an era of involuntarily shared customer data that lasted over 25 years.
Beginning in the mid-'90s, third-party cookies: code snippets placed on websites or servers allowed advertisers and publishers to collect, analyze and share information about users, in addition to creating an opportunity to target and re-target users with personalized ads. With increased use and abuse of this data collection tool, its shortcomings became clear:
- no consent was explicitly collected;
- no information was given to users as to how their data was going to be stored and used;
- no guaranteed data protection was employed, and breaches, shady commercial interests and malicious actions could expose user data within seconds.
The planned sunsetting of these third-party cookies has shaken the advertising ecosystem to its core. Even Google Analytics’ move from UA to GA4, to be completed by March 2023, was also, to a great extent, determined by the push for stronger data protection.
Some publishers and advertisers bemoan the loss of an easily accessible tool to track their users, from geolocation to age group and from buying power to search patterns. However, for companies looking for long-term staying power and profitability, the planned retirement of third-party data is an opportunity to build their business on more solid, socially responsible grounds.
Understanding the levels of party data
So, what are the differences between first- and third-party data? They represent, in fact, many levels of consent and intermediation between the user (e.g., the person or entity who visits a website) and the end receiver of user information.
Zero-party data is data consensually and proactively given by the user. An example would be a user clicking on a quiz, poll or newsletter list for which their name and email address are a prerequisite.
First-party data is extracted exclusively by the website a user is visiting, and second-party data is data shared by the website with a direct partner. Third-party data, by contrast, is gathered by external companies rather than the website the user is visiting.
Both first-party and third-party cookies are set through a server or code. The main difference, however, is who has access to collected data. In the case of first-party cookies, the data collected is only available to the host website. In contrast, for third-party cookies, the data is available to any website that uploads the code — or buys the collected database.
How to collect and leverage first-party data
Engagement is key to understanding users in a first-party, privacy-conscious world. Instead of acquiring bulk information about a user’s profile and behavior across the internet, publishers have to stimulate engagement with their visitors, with actions that include:
- reading articles;
- completing polls and surveys;
- navigating around the website;
- sharing content on social media;
- leaving comments;
- using the website’s search box;
- using the chat option.
This engagement allows the publisher to build user profiles and understand the customer journey in a very reliable way. On top of that, the navigation and engagement data can then be supplemented to further personalize the user experience.
Personalized user experiences
With more in-depth first-party data, publishers also have powerful insights into what their audience finds relevant, meaningful and engaging. Personalizing user experiences brings publishers much closer to the Holy Grail of marketing: a complete and accurate user profile.
Personalized user experiences offer opportunities for users to engage with more customized content. In exchange, they help publishers collect more data. Some strategies include:
- signups for periodical newsletters;
- signups for special promotions;
- paywalls for in-depth content;
- community access (social media, forums, comments);
- personalized profile for tailored content.
The effort required for this type of personalization is often minimal or one-off. Filtering content based on keywords, implementing a customer login page or adjusting content for emailing can often be done with few resources and high return on investment.
Give advertisers direct access to your hyper-targeted audience
Once you have built your mechanism for capturing first-party data and personalized your offering, you may already see more engaged and loyal segments. However, at this point, you are also sitting on a trove of advertising gold. Instead of a messy mass of indistinct users, your audience has a distinct set of interests, demographics and proven behavior.
By providing space and information for advertisers, you are offering unrivaled benefits, such as:
- enabling advertisers to tailor campaigns to specific segments;
- allowing for quick adjustments based on real-time insights;
- monetizing through high-quality, well-customized content that ultimately benefits the user.
In fact, as early adopters have noted, this push to first-party data has nudged companies into building data lakes. These can be used for their own benefit but also, depending on size and granularity of information, for monetization through ads.
Going big with first-party data: publishers’ data platforms
Big publisher networks can build their own advertising or data platforms and sell their proprietary audiences to advertisers. Insider’s Saga platform is an example of how first-party data can be leveraged for advertisers in a way that also enables users to find relevant information.
With Saga, Insider, across its many publishing platforms, collects user information — not directly about who the user is, rather what they do across Insider’s portfolio. This first-party audience behavior data is then transferred to advertisers who can thus identify the right audience for their product.
DTMG has grown its database of hashed emails from 5 to 55 million in a year. The San Francisco Chronicle and Conde Nast have also developed strategies to connect advertisers with audience data. Naturally, the more internet properties that can be aggregated into one data lake, the more powerful the audience insights — and the more powerful the advertising fit.
For publishers, owning the data comes with both power and risk: without a good data collection, management and usage strategy, the game is yours to lose. Under the best conditions, it brings your audiences closer and increases engagement. Working with trusted advertisers is one way to manage the risk; evolving your on-site strategy to test what works best is another way to stay ahead.
For advertisers, on the other hand, operating on first-party data platforms offers the prime benefit of addressing a pre-qualified audience.
For users, most importantly, first-party data collection can bring critical benefits:
- enhanced content relevance;
- enhanced ad relevance;
- comment moderation (and safer, more civil discourse).
First-party data is, unquestionably, fraught with challenges. The first and largest is the readiness for change itself.
Apart from this initial hurdle, two major challenges are looming.
Material resources: Even when the readiness for change is there, the material and human resources necessary are tremendous. In the case of DTMG, its success triggered a wave of necessary investments — clean rooms for aggregated data, as well as data analysts and creatives to interpret and cater to the segmented audiences — that may not be accessible for smaller companies. The key is starting small and scaling up.
Knowledge: Even if the mindset and material resources are in place, we are at the beginning of a journey. No one, for instance, has any standardized way of identifying, analyzing or measuring the segments uncovered through first-party data collection. We are all, in a sense, building the plane while flying it. The key here is to start early, collecting data as early as possible, and to observe, taking notes of other early adopters’ successes and failures.
Building trust, driving engagement and improving content performance through personalization are still undeniable key benefits of first-party data policies. To that, we need to add that first-party data also gives publishers the ability to better understand their audiences and serve better content and ads.
For publishers that leverage their first-party data smartly, the new world will yield, in fact, more accurate information about their audiences. In the end, demographics previously gained through third-party data did not always predict whether a customer will click the buy button. Previous actions across the website, however, may instead be a more powerful predictor.